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Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Australia’s enacted individual tax change is a staged rate cut, not a 2025–26 increase. The 16% resident marginal rate falls to 15% from 1 July 2026 and to 14% from 1 July 2027. Ordinary 2025–26 PAYG withholding tables and thresholds remain unchanged, so most people will not see the new rates in withholding until the 2026–27 income year.
For the tax return you are preparing now, the practical questions are different: which expenses you can substantiate, whether you must lodge by 31 October, when a bill is payable, and why an expected refund may be delayed or reduced.
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Did Australian tax rates increase?
No. The major enacted individual-rate change is a reduction that starts on 1 July 2026. The Australian Taxation Office (ATO) says the 16% resident rate will become 15% from that date and 14% from 1 July 2027. The change affects the relevant income years; it does not retroactively alter a 2024–25 or 2025–26 assessment.
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1Clear out junk files and repair common Windows errors2Scan for outdated or missing drivers - takes under a minute3Repair Windows errors before they cause bigger problemsThe Federal Budget did not change ordinary resident rates or thresholds for 2025–26. The ATO’s 2025–26 PAYG notice therefore uses the existing schedule. An employee whose employer withholds tax during 2025–26 should not assume the later cut has already increased take-home pay.
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Resident rates shown by income year
| Income year and band | Tax-free threshold | Marginal rate bands above the threshold |
|---|---|---|
| 2024–25 resident return | Up to $18,200 | 16% from $18,201 to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; 45% above $190,000 |
| 2025–26 | Existing schedule continues | Ordinary rates and thresholds were not changed by the Federal Budget, according to the ATO’s 2025–26 PAYG notice |
| 2026–27 | Tax-free threshold remains separate from the cut | 15% up to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; 45% above $190,000 |
| From 1 July 2027 (2027–28 income year) | As legislated for the relevant year | The first marginal rate reduces further to 14%; the ATO identifies the same $45,000, $135,000 and $190,000 boundaries for the 2026–27 schedule |
A marginal rate applies only to the slice of taxable income in that band. A rate reduction is therefore not a dollar-for-dollar increase in your refund or pay: the benefit depends on your taxable income, tax offsets, Medicare levy and the amount already withheld.
When do the new tax cuts start?
1 July 2026: first reduction
The first reduction applies from 1 July 2026, when the 16% rate becomes 15%. It belongs to the 2026–27 income year, which runs from 1 July 2026 to 30 June 2027.
1 July 2027: second reduction
From 1 July 2027, the same rate becomes 14%. This is a separate staged change, not an extra adjustment to your 2025–26 return.
What this means for PAYG withholding
For 2025–26, the ATO says ordinary withholding rates and thresholds did not change. Employers therefore continue using the 2025–26 tables. When the 2026–27 tables apply, withholding should reflect the enacted schedule, but your final liability is determined by the tax return and notice of assessment rather than a single payslip.
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What deductions can you claim?
An expense is deductible only when it is connected with earning your assessable income and meets the ATO’s substantiation requirements. Paying for something at work is not, by itself, enough. Private expenses, expenses reimbursed by an employer, and costs unrelated to producing income generally cannot be claimed.
Evidence you should keep
Keep records that show what you bought, when you bought it, the amount, the income-producing purpose and how you calculated any work-related portion. A receipt is the clearest evidence, but bank or card records do not replace the need to explain the work connection and apportionment where an item has private use.
The $300 work-related-expense rule
For total work-related expenses of $300 or less, written receipts are generally not required. You must still retain records showing how you worked out the claim. The $300 amount is a recordkeeping shortcut, not an automatic deduction and not a tax refund.
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Equipment and other depreciating assets
Tools, reference books, computers and office furniture can be depreciating assets. An immediate deduction may be available for an eligible asset costing $300 or less, subject to the asset’s income-producing use and other ATO conditions. More expensive assets are generally claimed over their effective life or under an applicable depreciation method rather than written off in one year.
Do deductions create a dollar-for-dollar refund?
No. A deduction reduces taxable income. The tax saving is broadly the deduction multiplied by the marginal tax rate that applies to the relevant slice of income, subject to offsets, levies and other parts of the assessment. If you claim a $300 expense, that does not mean the ATO pays you $300.
What about the proposed $1,000 instant deduction?
The ATO describes a proposed $1,000 instant deduction for work-related expenses as applying from 2026–27 only if enacted. It does not apply to Tax Time 2025. Treat it as a proposal until legislation and final ATO guidance confirm the conditions; do not use it to enlarge a 2024–25 or 2025–26 claim.
Are ATO interest charges deductible?
Interest rules changed on 1 July 2025. The ATO states that general interest charge (GIC) and shortfall interest charge (SIC) incurred on or after that date can no longer be deducted. Amounts incurred before 1 July 2025 can remain deductible under the transitional treatment.
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GIC generally accrues when a tax or other liability remains unpaid after its due date. Paying promptly or arranging an approved payment plan can limit additional interest. A payment plan does not erase the underlying debt or automatically stop all charges, so check the terms shown by the ATO.
When is your tax return due?
Self-lodged individual return
If you lodge your own individual return, the standard deadline is 31 October each year. When 31 October falls on a weekend, the next business day applies. The deadline concerns lodgment, not merely starting a return in myTax.
Using a registered tax agent
Registered tax agents generally have special lodgment schedules. You still need to engage the agent before 31 October to be covered by the agent’s program; waiting until after the deadline can leave you exposed to the standard date and any late-lodgment consequences.
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Records to assemble before lodging
- Income statements and payment summaries shown in ATO systems.
- Receipts and calculation records for each deduction, including work-use percentages.
- Private health insurance and other details relevant to the return.
- Current Australian financial-institution account details for any refund.
- Information about existing ATO or government debts that could affect the amount paid to you.
When must a tax bill be paid?
| Situation | Usual payment date |
|---|---|
| Self-lodged return lodged from 1 July to 31 October that produces a bill | 21 November |
| Assessment issued after 31 October | 21 days after the assessment date |
| Return lodged late | Generally still 21 November for the standard self-lodgment cycle, with interest potentially applying after that date |
The date printed on your notice of assessment controls if it differs from a general example. Do not confuse the lodgment deadline with the payment deadline: a return can be lodged on time and still leave a payment due on 21 November.
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If you cannot pay in full
Contact the ATO before the due date to discuss a payment arrangement. Because GIC can continue on unpaid liabilities, an early arrangement is usually less costly than ignoring the bill. Keep confirmation of the agreed schedule and make each instalment on time.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How long does an Australian tax refund take?
Indicative processing times
Current ATO Community guidance says most online returns take about two to four weeks to process. Paper returns can take up to seven weeks. These are indicative periods, not guarantees; a return selected for verification or requiring extra information can take longer.
When the refund clock ends
The refund effective date is usually the day the ATO sends the money to the nominated financial institution. Your bank may then take additional processing time. A myTax estimate is not the final result: the notice of assessment is the document that confirms the assessed refund, bill and payment date.
Why the ATO may hold a refund
The ATO may retain certain refunds or credits for up to 90 days. Providing valid Australian financial-institution details with the return avoids the holding rule associated with missing or unsuitable account information. A hold can also reflect processing checks; submitting duplicate returns or repeatedly changing bank details is unlikely to speed the review.
Why a refund can be lower or redirected
- Government debts: ATO debts or debts owed to another Australian Government agency can be offset against the refund.
- Different assessment: The ATO may disallow an unsupported deduction, adjust income or apply a levy or offset differently from your estimate.
- Missing bank details: The refund may be held until valid Australian account information is supplied.
- Processing checks: Verification of income, deductions or identity can delay release.
2025–26 versus 2026–27: practical comparison
| Question | 2025–26 | 2026–27 and later |
|---|---|---|
| Resident rate change | No ordinary rate or threshold change from the Federal Budget | 16% becomes 15% from 1 July 2026; it becomes 14% from 1 July 2027 |
| Key thresholds | Existing schedule applies | $45,000, $135,000 and $190,000 boundaries in the 2026–27 schedule |
| PAYG withholding | 2025–26 tables do not include the later cut | Use the applicable 2026–27 tables once that income year begins |
| Work-related evidence | $300 recordkeeping shortcut still requires a calculation record; special categories excluded | Same enacted evidence rules unless legislation changes them; proposed $1,000 instant deduction is not a Tax Time 2025 rule |
| Self-lodgment deadline | 31 October, or next business day if it falls on a weekend | Same standard deadline |
| Typical self-lodged bill date | 21 November when lodged by 31 October and a bill results | Same general payment rule; later assessments are due 21 days after issue |
| Refund handling | About 2–4 weeks online and up to 7 weeks paper in current guidance; holds and offsets can apply | Those are current indicative timings, not a guaranteed future service level |
A practical tax-time checklist
- Identify the income year. Separate a 2024–25 or 2025–26 return from income earned after 1 July 2026, when the first rate cut begins.
- Check pre-filled income. Compare ATO records with payslips, interest statements and other documents before accepting the figures.
- Sort deductions by category. Keep ordinary work expenses separate from car, travel, meal-allowance and award-transport claims.
- Document every calculation. Record work-use percentages, dates, totals and the method used, even where the receipts shortcut may apply.
- Confirm the lodgment channel. Self-lodge by 31 October or engage a registered agent before that date.
- Review the estimate. Treat any displayed refund or bill as provisional until the notice of assessment arrives.
- Check bank details and debts. Use valid Australian financial-institution details and investigate possible ATO or government offsets.
- Act on the notice. Pay by 21 November where that date applies, or by the date stated on an assessment issued later; contact the ATO early if full payment is not possible.
What to do if something goes wrong
Your refund is past the indicative timeframe
Check whether the return was paper, whether the ATO requested information, and whether your nominated account is valid. Then compare the status with the notice of assessment or ATO correspondence. Processing times are estimates, so a delay does not by itself prove an error.
Your refund is smaller than myTax predicted
Read the notice of assessment line by line. It shows which deduction or income figure changed and whether an offset was applied. If the adjustment is based on missing evidence, retain the records and follow the ATO’s review or amendment process rather than lodging a second return.
You received a bill you cannot pay
Note the due date, calculate what you can pay immediately and contact the ATO about an arrangement before GIC accumulates further. Keep making required payments under the arrangement and check future notices for changes.
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Quick Recap
Key takeaways for the 2025 tax season
- The 2025–26 withholding schedule did not include the later tax cut.
- The first enacted reduction starts on 1 July 2026, with a further reduction on 1 July 2027.
- A deduction needs an income connection and evidence; the $300 rule does not remove calculation records or special-category rules.
- Self-lodged returns are generally due 31 October, and a standard bill is generally payable 21 November.
- Refunds can take two to four weeks online or up to seven weeks on paper, and may be held for up to 90 days or offset against government debts.
- The notice of assessment, not an estimate, determines the final result.
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